(adds rare earth firm statement in para 7)
BEIJING, Sept 24 China's sovereign wealth fund,
fresh from a series of investments in the global commodities
sector, may launch its own domestic rare earth firm, a banking
source and newspaper report said on Thursday.
China Investment Corp (CIC) could do so through Jianyin
Investment, its wholly-owned domestic industrial investment arm,
said the source, who is familiar with CIC. The $298 billion
sovereign wealth fund's primary focus is on foreign investments.
Rare earths are metals used in high-tech devices and green
products. For a factbox, click on [ID:nSYD28850].
CIC and Jianyin are talking with Baotou Steel (600010.SS)
and the government of Baotou city in Inner Mongolia about
setting up a rare earth company, state-run Economic Information
"The talks are in a framework under which the two parties
would set up a multi-billion yuan company to specialise in rare
earth exploration and stock building," the paper cited an
unnamed source with knowledge of the issue as saying.
"It will also help restructure Inner Mongolia's rare earth
mining industry and CIC will hold a more than 80 percent stake,"
the source told the paper.
Shares of Inner Mongolia Baotou Steel Rare-Earth Hi-Tech
(600111.SS) soared by the daily limit of 10 percent on the news.
The company said in a statement to the Shanghai stock exchange
that it had met with CIC officials earlier this month to discuss
cooperation, but that no agreement had been reached yet.
"It is our long-standing principle not to comment on any
market rumours," a CIC public relations official said.
Rare earth metals are widely used in high-tech industries,
such as information technology, biology, new energy and space
and ocean exploration. China has proven rare earth reserves of
52 million tonnes, accounting for about 58 percent of the
world's proven reserves.
China's rare earth products have a 90 percent share of
global markets, but some officials have said that it should
conserve more of the resources for its own future use.
"CIC's participation in the rare earth industry is just the
begining and the state might take more forceful measures to ramp
up stock building," an industry source told the newspaper.
The Inner Mongolia government issued a circular on Thursday
ordering Baotou Steel to cap its rare earth production at 46,000
tonnes for this year, Xinhua reported, without offering a
comparison to previous years.
Jianyin is a subsidiary of Central Huijin, CIC's domestic
investment arm, and it was recently transformed into an
industrial investment firm from a financial entity, the banking
Over the past three days, CIC has bought a 14.5 percent
stake in commodities trading firm Noble Group (NOBG.SI) and lent
Indonesian coalminer PT Bumi Resources Tbk (BUMI.JK) $1.9
(Reporting by Eadie Chen, Aileen Wang and Simon Rabinovitch;
Editing by David Cowell)